Newmont works in Ghana to avoid Indonesia, Peru pitfalls

Newmont works in Ghana to avoid Indonesia, Peru pitfalls

Heather Draper, Dow Jones, Denver

Newmont Mining Corp. (NEM) says it is working hard in Ghana to
avoid the environmental and social mistakes it made in Peru and
Indonesia, but the world's largest gold producer still has its
critics.

Ghana, in Western Africa, is among Newmont's biggest hopes for
future gold reserve replacement, a key measure used to value
mining companies.

Chief Executive Wayne Murdy has said that Newmont, of Denver,
can't afford to walk away from Ghana because of the large
estimated gold reserves there, even though it poses the same
socioeconomic and public relations risks as other developing
countries.

To try to avoid some of the pitfalls it has encountered
overseas - including an ongoing criminal trial over pollution
charges in Indonesia - Newmont hired the University of Colorado
School of Medicine to do health assessments in Ghana prior to
starting operations there.

The studies found that disease and poor sanitation were
already problems in many of the communities in Ghana near where
Newmont wants to open two new open pit mines - Ahafo in 2006 and
Akyem, which is still in the permitting phase.

Newmont expects to produce from 500,000 to 550,000 ounces of
gold a year at Ahafo and 375,000 ounces a year at Akyem.

"We've learned a lot of things at all of our operations
globally ... so as we started in Ghana, we focused on bringing
our best practices to bear," said William Zisch, vice president
of African operations for Newmont. "We're really working with the
communities, and our environmental standards in Ghana will be as
strict as anywhere we operate."

Still, bad news has trickled out of Ghana, including the
shooting of a farmer by Ghana police in November during a protest
of Newmont near its Akyem project. Newmont has said its only
involvement in the incident was calling the police about the
protest, which included a roadblock near the future mine site.

Ute Hausmann, the German coordinator of the human rights group
FoodFirst Information and Action Network, or FIAN, said Newmont
is spending a fair amount of time and resources on communication
with villagers in Ghana.

"However, you cannot solve substantial issues through
communication only," Hausmann said. "About 9,500 people have been
displaced economically, which means they have lost access to land
that they depend on for their livelihood."

FIAN is also concerned about the environmental effects the
mines will have on water resources in the areas near the mines,
she said.

Most recently, technical mining experts have raised concerns
about Newmont's environmental assessments at Ahafo.

In a report by the Center for Science in Public Participation
dated Dec. 9, scientists pointed out problems with Newmont's data
in the Environmental and Social Impact Assessment it prepared for
the International Finance Corp. in hopes that the IFC will help
fund the project. The center, based in Montana, provides
technical advice to grassroots groups on environmental issues
related to mining.

Newmont used data averaging or admitted it had incomplete data
in the Ahafo ESIA, the center's report said.

"It is sometimes unclear whether this 'averaging' is a product
of lack of data or reporting, but it makes it impossible to
accept many of the ESIA's conclusions," wrote authors Stuart
Levin, a mining reclamation expert, and David Chambers, a
geophysicist.

The report also asserts that Newmont "sometimes proposes to
utilize significantly less stringent human health and
environmental standards in Ghana than those it uses in the United
States."

Neither of the authors could be reached for further comment on
Wednesday.

Newmont spokeswoman Heatheryn Higgins said the company hasn't
seen the report so she couldn't comment on it.

"We understand they (the center) submitted it to the IFC and
it's just part of the public comment process," Higgins said.
"We're working with the IFC and will address any issues that
arise in a responsible way."

Newmont's Zisch admits it will be hard for the company to
avoid problems when it's starting mining operations in such a
poor region.

"I can't deny that we have an impact when we come in and start
a mine," he said. "Hopefully, that impact will be mostly
positive, but we know there will be issues along the way."

One of the biggest issues he sees arising in Ghana stems from
the high expectations of villagers there for jobs.

"We recently had 10,000 applicants for 600 jobs," Zisch said.
"In a region like that, with its lack of resources, you have the
potential to have a lot of people with high expectations ... and
some who will be disappointed."

But unlike in Peru and Indonesia, Newmont is partnering with
nongovernmental organizations in Ghana to try to do things
better, he said. "NGOs understand the community and
development ... We do mining and exploration, so it's better to
partner with them," he said.

Newmont is working with the OICI (Opportunities
Industrialization Centers International), the Ghana Wildlife
Society and Conservation International, among others, he said.

Newmont has even flown tribal leaders from Ghana to Denver to
meet with company executives and to Nevada to check out the
company's operations there.

"The assets are here (in Ghana) and will have us here for a
long time, and that's why we can commit to doing these projects
in an environmentally sound and socially responsible manner,"
Zisch said. "We're going to be here for a long time ... and we're
making a commitment up front to do it right."